Filing your income tax return in India as an NRI doesn’t have to be a headache. The key is understanding what kind of income you have, and choosing the right ITR form accordingly. In this blog, we’ll walk you through everything in plain English so you can file your ITR without stress or confusion.
Filing income tax returns in India as an NRI can feel overwhelming, especially when tax laws keep changing, and you're stuck figuring out whether to file ITR-2 or ITR-3. The forms look complicated, the jargon is exhausting, and if you’re earning income both in India and abroad, things can get even trickier.
But take a deep breath, you’re not alone. With guidance from a trusted CA firm in Gurgaon, we’ve simplified the entire process for you in this guide. Whether you’re earning rent from a flat in Mumbai, consulting for Indian clients from Dubai, or holding shares in Indian companies, we’ll help you pick the right ITR form and file it with confidence.
Not everyone living outside India automatically qualifies as an NRI for tax purposes. The Income Tax Act has its own definition:
You are considered a Non-Resident Indian (NRI) if:
If either of those applies, then you're treated as an NRI while filing income tax in India.
Yes, but only if you have income earned in India.
Here’s when an NRI must file an ITR:
So, even if you’re earning abroad, having taxable income in India means you’ll likely need to file your return.
For a clear example of how to draft an Income Tax Notice Reply, you can also check our detailed Income Tax Notice Reply Format blog.
This is where most NRIs get stuck. Let’s make it simple.
You’re an NRI and your Indian income includes:
And you do NOT earn income from a business or profession in India.
👉 In short, ITR-2 is ideal for most NRIs earning passive income from India.
You’re an NRI with active income in India, such as:
👉 If you’re managing or involved in any business/professional activity in India — ITR-3 is the right choice.
Must Read: How to Report & Pay Tax on Foreign Income in India
Even though NRIs are only taxed on income earned or received in India, if you hold foreign assets or earn abroad, there are a few important things to note.
Being transparent here is not just good practice, it helps you avoid notices from the Income Tax Department and ensures compliance. If you’re unsure about filling these correctly, consulting an experienced income tax consultant in Gurgaon can make the process smooth and error-free.
Your residential status plays a key role in determining how your income is taxed in India.
Knowing where your income comes from helps you:
If your total Indian income exceeds ₹2.5 lakh, you are required to file an income tax return — even if you live and work abroad.
Recommended: How Foreign Companies are Taxed in India: A Complete Guide
Let’s break it down based on the type of income you have:
➡️ Use ITR-2 if you only have rental income
➡️ Use ITR-3 for business/professional income
➡️ Use ITR-2 (unless it's part of business income)
➡️ Use ITR-2 to report this income
NRIs may not get access to all tax deductions available to residents, but they can still save significantly:
If you miss the deadline (typically 31st July unless extended):
Always try to file on time to avoid unnecessary penalties and stress.
As of now, NRIs are exempt from linking Aadhaar if they are not eligible for one.
No, NRIs need to e-verify using net banking or DSC, not Aadhaar OTP.
Only if you become a Resident under Indian tax rules. NRIs are taxed only on income earned in India.
Yes, as long as you can e-verify through other means (like net banking).
Filing ITR as an NRI doesn’t have to feel like decoding a puzzle. Once you understand your income type, the right form becomes obvious. Passive income? Go with ITR-2. Business income? Choose ITR-3.
And when in doubt, speak to a tax professional who understands NRI tax filing nuances.
At DSRV India, we’ve helped thousands of NRIs around the world file their ITRs with complete confidence. Whether you’re unsure about the form, dealing with foreign income, or late filing — we’ve got your back.
Not disclosing foreign income or foreign assets in your ITR? Learn about penalties, reporting rules, and how to stay compliant with Indian tax laws.
Confused about ITR form filing for NRIs? Understand the difference between ITR-2 & ITR-3. Which ITR form to file your income tax return in India as an NRI.
A Resident Guide on how to report & pay tax on foreign income in India. Learn about ITR, tax credits, foreign tax credit, tax filing & foreign assets.
